(June 2025) U.S. inflation rises 0.1% in May from prior month, less than expected

Tell that to the Feds who held rates steady and are more inclined to not cut rates at all.

I'd fire Jerry Powell and Austin Goolsby (Pres of Chicago Fed Reserve Bank). Nope, no politics involved with this Fed.

 

Pretty reasonable position to take.

 

Can you say "stagflation"?
The Fed Isn’t Calling It ‘Stagflation,’ but the Risks Are Rising
President Trump’s trade war is likely to lead to higher prices and slower growth, a challenging combination for the Fed. War in the Middle East could make the job harder still.

 

So you think we are in a recession?

Powell was appointed by Trump.

 

It brings up an interesting question. Should the fed try to fight inflation that is directly caused by taxes? So if we had a nationwide 5% tax put in all at once, would it make sense for the fed to try to fight that with higher rates?

 

I’ve heard Powell say that it’s a balancing act, but that he would lean towards supporting economic growth (cutting rates) vs fighting inflation (raising rates). Basically implying that an elevated inflation rate is better than a crash in the economy.

 

Economists will often say this, but they forget how badly people hate inflation and how disruptive it is. I’ve always viewed the Fed’s role as primarily to fight inflation - not to create jobs by expanding the money supply.